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Advice for Entrepreneurs, Selling a Business

The Einstein Effect

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The recent headline “Einstein’s Note On Happiness, Given To Bellboy In 1922, Fetches $1.6 Million” demonstrates a few things relevant to valuation.

Albert Einstein, the German-born theoretical physicist, father of the theory of relativity and the famous E = mc^2, and soon-to-be Nobel prize winner, was travelling to Tokyo in 1922 when he learned was was to be awarded the Nobel Prize in Physics.  As the story goes, he didn’t have cash to tip the Imperial Hotel bellboy, and instead gave him a note which read: “A calm and modest life brings more happiness than the pursuit of success combined with constant restlessness.”  Einstein told the bellboy to hang on to it as it “will probably be worth more than a regular tip.”

As we found out this week, Einstein was right.

That irreplaceable uniqueness, the content and the background story all gave this simple note incredible value.   I have to think that, without the rarity of the correspondence, without the context of Einstein’s Nobel Prize, without the simple message of a happy life, and certainly without the Albert Einstein authorship, this note would have been worth less or worthless.  In business, the parallels might be: a rare / unique asset or opportunity, success (market leading, prize winning), focus and relevance, and a recognized and accomplished team.  These are key drivers of value.  So that “Einstein Effect” — rare, successful, relevant and recognized — really can drive value for businesses as well.


Alan Fullerton is a partner with Mirus Capital Advisors. He works with owners of middle market businesses and can be reached at fullerton@merger.com.